Residential propety

Federal and State Reforms Needed to Fix Florida’s Home Insurance Problems | Opinion


The insurance crisis is hitting Florida hard.

Miami Herald File

Florida’s property insurance market has historically been among the most complex in the country due to catastrophic hurricane damage, but the industry’s downward spiral in recent years has been particularly troubling. So much so, in fact, that the state legislature will convene a special session devoted to home (but not timeshare) insurance starting Monday.

An article by Ben Conarck of the Miami Herald recently chronicled how the appalling collapse of the Champlain Towers “has further ignited an exodus of insurers who are no longer willing to underwrite policies in an increasingly risky Florida condo market.” . He noted that condo associations are forced to resort to the excess market for less coverage at more expensive rates.

“Condominium associations are struggling to renew their pre-Surfside policies, forced instead to sift through estimates for less protective plans that cost twice as much or more. Those lucky enough to renew their policies do so with premium increases of 30% to 50%,” according to Conarck’s expert sources.

They also state “[s]hacking costs and tighter restrictions in the insurance and lending industries have raised new fears that some particularly troubled condominiums may not be insurable. Companies are going to require inspections and financial records — and even meeting minutes — to determine the level of risk in a given building.

Indeed, some analysts are predicting that the state home insurance market is on the verge of total collapse. They mention the six property and casualty insurance companies that offered homeowners insurance in the state but have been liquidated since 2017, and two more are in the process of being liquidated this year.

They also note that other insurance companies are voluntarily leaving the state, and many of those that remain are adopting strict new eligibility requirements and refusing to renew huge swaths of residential policies.

The State of Florida requires condo corporations to maintain adequate property insurance to cover damage from storms, wind, and fire, and some corporations’ governing documents stipulate additional liability insurance requirements. general and flooding.

Given these requirements and the issues affecting the market, state legislators should not shirk their responsibilities by ignoring the condo insurance market after convening a special session to address issues affecting homes. single family.

As with most problems of this magnitude, solutions will likely require reforms at the federal and state levels. Nationally, U.S. Representative Charlie Crist (D-St. Petersburg) recently introduced the Homeowners Affordable Insurance Refueling Act, or FAITH Act, to provide a federal safety net in the event of catastrophic losses providing loans to state insurance commissioners for insurance costs above a set threshold. . The bill has the support of the Federal Association for Insurance Reform.

At the time of this column’s press, it remains unclear what changes Florida lawmakers are considering for the special session, and whether there are any other changes in store for the government-sponsored citizens’ property insurance. State. Last year, the state passed several reforms to curb fraudulent claims and allow citizens to implement larger rate increases, and it sought state approval for an 11% increase.

What is painfully clear is that hurricane season begins June 1 and the precarious state of Florida’s property insurance industry may not be strong enough to withstand the impacts of one or more major hurricanes. State lawmakers should seize the opportunity presented by the special session to implement changes to reduce fraudulent claims, strengthen homes and condominiums, strengthen the building code, add technical inspections, improve transparency and partner with private sector lenders for onshore lending programs. aging buildings.

The problems facing the property insurance market in Florida will not be solved by a single solution, but an approach that combines a number of reforms and includes federal and state initiatives will have the best chance of reversing the trend and steer the industry in the right direction. direction.

Nicole R. Kurtz is a shareholder in the South Florida law firm of Siegfried Rivera, which is based in the firm’s Coral Gables office and focuses on community association law. She is a regular contributor to the firm’s Association Law Blog at The firm also has offices in Broward and Palm Beach counties, and its attorneys focus on real estate, construction, community association, insurance, and bankruptcy law., [email protected], 305-442-3334.